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Japan's JFE To Focus On Lighter Steel In USD 6 Billion Upgrade, Warns On U.S. Trade Policy

A key goal of the capital expenditure plans, outlined by JFE Holdings President Eiji Hayashida in an interview on Wednesday, will be to help the firm meet growing demand from the auto industry for lighter steel and new materials to make electric and other cars of the future more fuel-efficient

JFE Holdings Inc, parent of Japan's second-biggest steelmaker, plans to spend more than 650 billion yen ($6 billion) over the next three years upgrading domestic production facilities in a bid to raise productivity and competitiveness.

A key goal of the capital expenditure plans, outlined by JFE Holdings President Eiji Hayashida in an interview on Wednesday, will be to help the firm meet growing demand from the auto industry for lighter steel and new materials to make electric and other cars of the future more fuel-efficient.

The pivot comes as Asia's steelmakers seek to make the most of still-robust demand from China. But while sales in the world's second-biggest economy offer hope, festering tensions on global trade as U.S. President Trump ponders tariffs and quotas on imports of steel and aluminium are becoming a major headache for industry executives like Hayashida.

"We've spent a bit more than 650 billion yen in the past three years on domestic facilities and we will need to do it again for the next years, which would give us a very competitive foundation," Hayashida told Reuters.

"We may even increase spending," he said, with Japan home to most of JFE's crude steel manufacturing. Details of JFE's new business plan through March 2021 will be announced around April.

"I think we don't have to worry about China (economic) risk, at least this year," Hayashida said, warning he sees slower Chinese demand from next year.

"My biggest fear is how far President Trump will close down trade," the executive said. "If the U.S. takes action (to curb imports), it may trigger retaliation by other countries. What is most troublesome is to see the world heading to protectionism."


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